Inferior Markets Explained: Markets Which Rely on a Bad Economy

Sometimes, it is easy to assume that the demand of all goods and services will be increased as the economy improves, and that everybody can benefit from a good economy, but this is not true. There are many products, services, and markets that thrive under poor market conditions. These products are often referred to as "inferior" goods and services. An inferior good is a good for which demand DECREASES when income of a potential consumer increases and demand increases when income of a potential consumer decreases. Meaning that, in essence, when a potential consumer is “poorer”, they’ll buy more, but when they’re “richer”, they’ll buy less. At first, this does not make intuitive sense, right? But think about a kid in college. Because they are allocated a limited amount of money, they are forced buy more cup of noodles because of their budget. But, as that college student goes out into the labor force and starts earning more money, there are high chances they would start buying steak rather than noodles. Contrary to this, a normal good is a good of which you buy more of as a potential consumer's budget increases. For example, caviar (assuming you enjoy eating it) is a normal good. As your income increases, you will buy more caviar.


As seen with the cup of noodles, there are actually markets which are based around the assumption that a nation's economy will not increase beyond a certain point. For example, stores like Wal-Mart advertise the phrase "Save Money, Live Better". They have built their brands for years around a cheap, budget store. They're assuming the need for these items will last, and that all of a sudden the majority of consumers will no longer seek glamour and luxury.

Once again:

Inferior good: a good for which demand DECREASES when income of a potential consumer increases and demand INCREASES when income of a potential consumer decreases
Normal good: a good for which demand INCREASES when income of a potential consumer increases and demand DECREASES when income of a potential consumer decreases

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